eBusiness Weekly
Tapiwanashe Mangwiro
SeedCo International, a listed seed manufacturer, says it expects full-year profit before tax to be lower than a year earlier as it was hurt by the drop in sales volumes and a negative impact on scale economies.
The audited financial information on which this trading update is based will be released before the end of June 2022, according to the company.
“The Board of the Seed Co International Limited (SCIL) Group therefore hereby announce that the group’s profit before tax from continuing operations for the full year period ended 31 March 2022 will be approximately 20 percent to 30 percent (between US$3,1m and US$4,6m) lower than the profit before tax from continuing operations amounting to US$15,3m for the corresponding period ended 31 March 2021 mainly due to reduced sales volume performance and adverse impact on economies of scale,” the company said in a trading update.
The group’s first half profit declined 40 percent to US$1,5 million from US$2,5 million in the comparative period. Revenue jumped to US$35,6 million from US$27,9 million. The effect of volumes, a key indicator of demand, was approximately US$5,5 million, with price adjustments, particularly in Zambia, accounting for nearly US$4 million of that increase in turnover.
Zambia, Malawi and Tanzania contributed significantly to the increase in terms of turnover as the early start of the season and increased demand in these markets pushed the turnover quite significantly.
The group expected growth in the Southern Africa market to help mitigate drought effects in East Africa. Despite drought trends, Malawi and Zambia were poised to end the year with better results than Tanzania.
However, Nigeria and Kenya are set to close the year lower than the previous year mainly because of production shortages coming from drought in the previous production season,” group finance director John Matorofa told an analyst briefing in November last year.
For the first six months ended September 30, 2021, the group’s balance sheet rose 23 percent to US$168,9 million from US$137,2 million in the same period last year. Major increases came from property, plant and equipment as the seed maker continued to capacitate its own production facility in Zambia.
Receivables increased to US$69,8 million from US$58,3 million previously.
Analysts are of the view that its regional market expansion could face risks from political instability in Ethiopia and some West African nations where it operates.
